Fact-Checking PolitiFact On Its "Lie Of The Year"

December 20, 2011 2:19 pm ET

Earlier in the year, Republicans in the House overwhelmingly voted on a budget proposal crafted by Rep. Paul Ryan (R-WI). Ryan's radical piece of "right-wing social engineering," as Newt Gingrich once referred to it, aims to, among other things, convert both the Medicaid and food stamp program into block grants, repeal the Affordable Care Act, and end the single-payer health care system known as Medicare. Unfortunately, the fact checkers at PolitiFact have decided that this indisputable fact — that the Ryan budget ends what Americans have long understood as Medicare, and replaces it with a more expensive and inferior privatized health care system that will be Medicare in name alone — warranted their "Lie of the Year" designation. But PolitiFact is wrong. Republicans have voted to end what all Americans know as Medicare. As economist and New York Times columnist Paul Krugman writes of PolitiFact's decision, "they've bent over backwards to appear 'balanced.'"

PolitiFact Picks "Republicans Voted To End Medicare" As Its Lie Of The Year

PolitiFact: "Republicans Voted To End
Medicare" Is Lie Of The Year. As explained by PolitiFact:

Lie of the Year 2011: 'Republicans voted to end Medicare'

[...]

PolitiFact debunked the Medicare charge in nine separate fact-checks
rated False or Pants on Fire, most often in attacks leveled against Republican
House members.

Now, PolitiFact has chosen the Democrats' claim as the 2011 Lie of the Year.
[PolitiFact, 12/20/11]

The Republican
Budget Will Replace Medicare With An Expensive And Inadequate Voucher Program

"The Path To Prosperity" Turns Medicare Into A Voucher
System. From "The Path to Prosperity":

Save Medicare for current and future generations while making no changes
for those in and near retirement. For younger workers, when they reach
eligibility, Medicare will provide a
Medicare payment and a list of guaranteed coverage options from which
recipients can choose a plan that best suits their needs. These future
Medicare beneficiaries will be able to choose a plan the same way members of
Congress do. Medicare will provide additional assistance for lower-income
beneficiaries and those with greater health risks. [The Path To Prosperity, 4/5/11,
emphasis added]

Medicare Is Different Than Voucher
Program Proposed By Ryan. As Nobel
Prize-winning economist and New York
Times columnist Paul Krugman explained:

Medicare is a government-run
insurance system that directly pays health-care providers. Vouchercare would
cut checks to insurance companies instead. Specifically, the program would pay
a fixed amount toward private health insurance - higher for the poor, lower for
the rich, but not varying at all with the actual level of premiums. If you
couldn't afford a policy adequate for your needs, even with the voucher, that
would be your problem.

And most seniors wouldn't be
able to afford adequate coverage. A Congressional Budget Office analysis found
that to get coverage equivalent to what they have now, older Americans would
have to pay vastly more out of pocket under the Paul Ryan plan than they would
if Medicare as we know it was preserved. Based on the budget office estimates,
the typical senior would end up paying around $6,000 more out of pocket in the
plan's first year of operation. [New York
Times, 6/5/11]

CBO: Under The GOP Budget, "Most Elderly People Would Pay More
For Their Health Care Than They Would Pay Under The Current Medicare
System." According to the Congressional Budget Office:
"Under the proposal, most elderly people would pay more for their health
care than they would pay under the current Medicare system. For a typical
65-year-old with average health spending enrolled in a plan with benefits
similar to those currently provided by Medicare, CBO estimated the
beneficiary's spending on premiums and out-of-pocket expenditures as a share of
a benchmark: what total health care spending would be if a private insurer
covered the beneficiary. By 2030, the beneficiary's spending would be 68
percent of that benchmark under the proposal, 25 percent under the
extended-baseline scenario, and 30 percent under the alternative fiscal
scenario." [CBO.gov, 4/5/11]

Politico: GOP Budget "Will Control Costs By
Requiring Seniors To Ration Themselves." From Politico Pulse:
"The Ryan plan to privatize Medicare will control costs by requiring
seniors to ration themselves, said Michael Tanner with the Cato Institute. 'Rationing
is going to go on within the Medicare system. It's a fact of life' given
financial constraints, he said. 'The question's going to be, is that decision
going to be made by government and imposed top down under the current system?
Ryan wants to shift that responsibility to individuals and from the bottom
up.'" [Politico, 4/7/11]

CEPR: The Republican Budget Would Leave "Seniors With A Bill Of
$20,700." According Dean Baker, the co-director of the Center for
Economic and Policy Research:

According to the CBO analysis the benefit would cover 32 percent of the
cost of a health insurance package equivalent to the current Medicare benefit
(Figure 1). This means that the beneficiary would pay 68 percent of the cost of
this package. Using the CBO assumption of 2.5 percent annual inflation, the
voucher would have grown to $9,750 by 2030. This means that a Medicare type
plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving
seniors with a bill of $20,700. (This does not count various out of pocket
medical expenditures not covered by Medicare.)

According to the Social Security trustees, the benefit for a medium wage
earner who first starts collecting benefits at age 65 in 2030 would be $32,200.
(This adjusts the benefit projected by the Social Security trustees [$19,652 in
2010 dollars] for the 2.5 percent annual inflation rate assumed by CBO.) For
close to 70 percent of seniors, Social Security is more than half of their retirement
income. Most seniors will get a benefit that is less than the medium earners
benefit described here since their average earnings are less than that of a
medium earner and they start collecting Social Security benefits before age 65.

In 2022, A Typical 65-Year-Old Would Be Paying Approximately Double
Compared To Current Levels. The Center on Budget and Policy Priorities
prepared a graphic comparing health care spending for a typical 65-year-old
under the current system to the same spending under the Republican budget:

Ryan Budget Would Raise The Retirement Age To 67, Possibly Pricing
Some Seniors Out Of The Market Or Raising Health Care Prices For All Americans.
According Time magazine's Swampland blog:

Even more vexing, however, is how 65- and 66-year-olds would get
coverage. Although Ryan doesn't say so in the Path to Prosperity document,
which was released on Tuesday, his plan would raise the Medicare eligibility
age from 65 to 67 by 2033. This would save the federal government money, but if
these people shop for coverage on the open market, one of two things will
happen: insurers will either price them out, or drive up prices for everyone.
Again, this depends on what Ryan would propose to do with the health care law's
new insurance regulations. [Time¸4/6/11]

If Medical Costs Continued To Increase Faster Than Voucher Values,
"The Average Retiree Would Be More Than $50,000 In The Hole."
According to an op-ed in the Huffington Post by R.J. Eskow,
Senior Fellow with The Campaign For America's Future:

Even if the voucher is given full Medicare value in Year One (which we
question), things start to get really bad after that. If medical costs
continued to increase at 9% each year, which isn't at all impossible, and the
voucher's value continued to increase at 5%, here's what would happen 10 years
later using my figures:

By 2031, the cost of Medicare-equivalent coverage would be $73,000, and
the voucher would be worth $18,000. By my calculation, the average retiree
would be more than $50,000 in the hole. [Eskow Op-Ed, 4/6/11
via Huffington Post, emphasis original]

Ryan's Budget "Would Effectively Result In More Rationing On
The Basis Of Income." According to the Center on Budget and
Policy Priorities:

Many future Medicare beneficiaries with modest incomes, such as elderly
widows who must live on $15,000 or $20,000 a year, also would likely be hit by
the plan's Medicare provisions; the Medicare voucher (or defined contribution)
they would receive would fall farther and farther behind health care costs - and
purchase less and less coverage - with each passing year. Aggravating this
problem, Ryan has said that his plan calls for repeal of a key measure of the
health reform law that is designed to moderate Medicare costs - the Independent
Payment Advisory Board. In other words, his plan would scrap mechanisms to slow
growth in the costs of health care services that Medicare beneficiaries need,
even as it cuts back the portion of those costs that Medicare would cover.

Affluent Medicare beneficiaries surely would respond to shrinking
Medicare coverage over time by buying more supplemental coverage. Those who
could not afford to do so, however, would get less health care. This is another
way that the Ryan health care changes would make ours more of a two-tier health
care system and would effectively result in more rationing on the basis of
income.

Centrist Think-Tank: Despite Ryan's Claim, "Current
Beneficiaries Are Not Protected In The Ryan Budget." According to
a report from Third Way by David B. Kendall, Senior Fellow for Health and
Fiscal Policy and Ryan McConaghy, Director of the Economic Program:

Despite promises to the contrary, current beneficiaries are not protected
in the Ryan budget. Under the Republican proposal, traditional Medicare would
quickly become second-class medicine. It would "wither on the vine,"
as then-House Speaker Newt Gingrich described a similar GOP effort in 1995.

The traditional Medicare plan, which covers three-fourths of today's
beneficiaries, relies on its huge size to keep costs down. Doctors and
hospitals are not required to participate in it, but they have little choice if
they wish to treat any seniors, who are the nation's biggest health care consumers.

Fewer doctors would participate in the traditional Medicare plan if there
were an alternative. The traditional plan pays physicians about 20% less than
private health insurance plans. Today, that is essentially a discount for the
large volume of Medicare patients. Under the Ryan budget, it would become a
reason for doctors to leave the traditional plan.

By 2030, only 55% of Medicare beneficiaries would still be eligible for
traditional Medicare according CBO. Actual enrollment would be less than half
of Medicare beneficiaries because many seniors would continue to enroll in
private health care coverage under Medicare Advantage. By 2040, traditional
Medicare would have only about 20% of Medicare beneficiaries.